Abstract

Extracted from text ... Number 47 - Part 1
N Bhana
The share price reaction on the Johannesburg Stock Exchange for special (extra) dividend announcements
1. Introduction
The "information content of dividends" hypothesis has emerged from the work of Lintner (1956) and Miller and Modigliani (1961). This
hypothesis states that company managers use dividend announcements to signal their belief about the prospects of the firm. An
announcement of an increase in the dividend rate reflects management's belief that the firm's earnings in the foreseeable future will be
sufficiently high to sustain payment at the increased rate. Similarly, an announcement of a dividend decrease occurs ..